The analysis includes a comprehensive literature review on corporate governance, its various mechanisms and the impact on financial performance of firms; as well as P.E.S.T analysis of the four companies. Impact of corporate governance mechanisms on modern companies Contents Sr.# Topic Pg. # 1. Introduction 4 1.1. Purpose of the study 5 2. Brief Background 10 2.1. Meaning and definition 10 2.2. Significance and relevance 11 3. Literature Review 14 3.1. Accounting & Finance Theory: Corporate Governance 14 3.1.1 Corporate governance mechanisms 18 3.1.2. Effect of corporate governance on earnings management 22 3.1.3. Agency theory and corporate governance 25 3.1.4. Corporate governance regulations 3.2. Impact of corporate governance on bank performance 3.3. Relationship between board rules and board effectiveness 3.4. Relationship between board effectiveness and financial performance 4. Industry/ Sector overview 4.1. Banking Sector 4.1.1. HSBC 4.1.2. RBS 4.2. Integrated Oil and Gas sector 4.2.1. British Petroleum P.L.C. 4.3. Retail sector 4.3.1. J. Sainsbury P.L.C. 5. Research Methodology 6. Findings and Analysis 6.1. P.E.S.T. analysis 6.1.1. HSBC 6.1.2. RBS 6.1.3. British Petroleum 6.1.4. J Sainsbury 7. Conclusion and Recommendations Reference list 1. Introduction The various financial scandals resulting on account of misappropriation of accounts and funds including top British banks such as Barclays Bank for the Libor scandal (The Guardian, 2012a); Lloyds Bank - which resulted in more than ?2 million worth of bonus cuts for the directors (The Telegraph, 2012); HSBC's money laundering scandal (The Guardian, 2012b); among many others have brought the issue of effective controls and monitoring policies of contemporary corporate institutions into question. Such financial and money-laundering scandals are not a recent phenomenon as is evident from the historically infamous cases involving top companies such as Enron and Worldcom among many others whereby the interests of the stakeholders and the general community were ignored by the management leading to widespread concern. Incidences such as these have raised serious concerns regarding the effectiveness of governing policies required to enhance accountability among the management and help control and monitor their activities and decision making, in order to safeguard the interests of the stakeholders. Scandals such as these are certainly not new and have been witnessed in almost all sectors of the industry. However the rising number of such incidences has brought to light the ineffectiveness of corporate governance policies or their lack thereof in preventing them. It has also given rise to debates regarding the vulnerability of stakeholders against the misappropriation of funds by the management and their lack of control in having a say in company matters. The failure of companies in recent times along with the historical cases whereby various companies were forced to shut down on account of such scandals (including BCCI, Maxwell Communications etc) has prompted researchers to probe into the matter and suggest effective solutions and recommendations with regard to various corporate governance issues. The literature on impact, influence and consequences of lack of corporate governance on financial frauds has grown over the years which reaffirm the consensus on the issue regarding its significance. This study
Abstract This paper attempts to analyze and discuss the various issues related to corporate governance and its impact on financial performance of companies. It also discusses the impact, problems and consequences of implementation of the same, and offers a comprehensive insight into the various mechanisms of corporate governance and the manner in which it affects the firm’s overall performance…
The importance of gender diversity has been found to be profound, increasing performance and success, and decreasing failures due to homogenous decision making processes that neglect various perspectives that would impact the direction that a company will take.
Considering the analysis and findings presented in the study, it is concluded that the usage of strategic planning tools improves organisational performance. In addition to this, the present study also concludes that there is a significant difference in the usage of strategic planning tools amongst high performing and low performing companies in Saudi Arabia.
The concept of corporate governance achieved acknowledgment since the 1980’s, when corporate organizations began exercising it as a benchmark ethical measure intended for accounting and financial reporting in addition to other fair practices. Formerly, corporate governance was defined as a standard collection of guidelines that is exercised to administer and implement control over corporate organisations.
The recent global financial crisis have brought to the fore issues and weaknesses in the international market for investments and securities, drawing concern to the financial health and operational continuity of potential equity investments. These concerns are exacerbated by the lack of transparency in the manner corporations operate, further undermining efforts to establish an international financial accounting standard and norms for the conduct of ethical business.
First of all, I received so much inner wisdom and courage from the God Almighty, without His mercy, this would have not been possible for me. For that I am ‘thankful’ to God. Undoubtedly, my honourable Supervisor Mr. Name of Supervisor considerably supported and helped to complete this assignment.
sources 35 4.6.1 Secondary data sources 35 4.6.2 Primary data sources 35 Reference 39 Chapter 2: Literature review 2.2 Theoretical review The term “Corporate Governance” has emerged as one of the pertinent debate topic for both business managers and academic scholars.
24 2.2.3 The Ethics Code 26 2.3 What Improvements in Corporate Governance are Possible for Deterring Corporate Fraud 27 2.3 Summary of the Literature Review 29 CHAPTER 3: RESEARCH DESIGN AND METHODS 30 3.1 Introduction 30 3.2 Research Philosophy 30 3.3 Research Approach 32 3.4 Limitations of this research 33 3.5 Chapter Review 33 CHAPTER 4: CASE STUDIES INVOLVING CORPORATE SCANDALS 34 4.1 Enron Case Study 34 4.2 Parmalat Case Study 35 4.3 Madoff Investment Securities Case Study 37 4.4 Stanford Financial Group Case Study 38 4.5 Chapter Review and Conclusions 39 Chapter 5: CONCLUSIONS AND RECOMMENDATIONS 40 REFERENCES 44 Acknowledgements Declaration of Originality DISSERTATION SUBMISSION FORM
The essence of corporate governance lies in the separation of ownership and control. The shareholders of a firm bestow the responsibilities to control and administer the firm on the board of directors. The managers while running the company have the informational advantage, which the shareholders do not have.
This study takes a similar shape with the objective of using case study research design to critically study how the practice of corporate governance in five major UK banks have transformed the banks in terms of profitability and growth. As part of the case study, the annual reports of the banks were critically studied, as well as other related literature.
60 pages (15000 words)Dissertation
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